Investor Tip: Beware of 'half-cooked' renovations
Blake Roeleven has had his fair share of hurdles to jump throughout his property investment journey—from having to deal with "shonky" tradesmen to renovating an entire unit with only his father and uncle to help him.
He bought his third property in Seaford, Victoria at $600,000 with the help of his father as a security guarantor, intending to spend on renovation and getting it revalued before releasing the security.
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Simple as it sounds, the interstate renovation proved to be extensive and exhausting as it was managed on a tight timeline with only a small team of three. Three days into renovating, Blake and his relatives found out that there were far more issues to be dealt with than what initially thought.
"We had a very tight schedule—Subfloor[ing], waterproofing, tiling, all that sort of stuff lined up. Once we took off the bathroom floor and we saw that there was no drainage, [and finding out that the] electricals are screwed, we were like, 'All right, things are going to get pushed back.' I'm a bit of... a task master and I'm just trying to work out the time slots and how things are working. I was like, 'All right, this is going to be a headache,'" Blake shared.
According to him, he should have known that there are going to be a lot of challenges along the way when he was granted access to the property pre-settlement. His advice to property investors: Don't hesitate to be upfront about your own terms and conditions when buying a property.
"If it's been a renovation [that has been] attempted, beware. Buyer beware, particularly if the renovations look half-cooked," he said.
"There's usually more than meets the eye once you start pulling away some stuff. I tried to get access pre-settlement, but they wouldn't budge. That would have helped a lot.
"Buying in a hot market usually means that you've got less opportunity to flex contract conditions and things like that. We sort of had to do what the vendor wanted to secure the property."
If Ben could do it all over again, he says he would be more forthcoming with what he wanted.
"He wanted to release the deposit early, but wouldn't let me into the property. I was like, 'It doesn't work like that. You give and take.' I think [it's all about] understanding basically what you want [at] the outset for the property, what you're prepared to part with in terms of the cash position... Renovating's hard work," he said.
Property investors must also be careful in choosing tradesmen to be part of the renovation process. According to Blake, while he was able to manage his budget well, getting ripped off by "shonky" tradesmen delayed his progress and made a lot of things more difficult.
"Throughout the process, it was just one road block after another, shocking tradesman that really made things really difficult... I've experience[d] just about every level of shonkiness," Ben said,
He advised his fellow investors to be wary of tradesmen who are readily available—the good ones are usually flat out booked—but consider those who charge a little more. After all, you get what you pay for in most aspects of property investment, from advice to service.
Blake and Smart Property Investment's Phil Tarrant also reminded everyone to pay attention to what happens "behind the scenes," before the actual renovation, whether you plan to do it by yourself or enlist the help of professionals.
"Before you start doing anything, make sure you speak to your accountant or speak to a depreciation guy, because they'll actually give you the idea—'You get a lot of value out of this if you pulled out kitchens and bathrooms and carpets and light fittings' and all this sort of stuff," Phil reiterated.
"I think that's the thing behind the scenes... Before I went live with doing the reno[vation]s with the property, I had meetings with the accountants, the property manager, all that sort of stuff, so I knew exactly where I stood," Blake concluded.
Tune in to Blake Roeleven's episode in The Smart Property Investment Show to know the steps he's taking to keep himself on track to achieve his goals, and why he's holding himself accountable for the overall success of his wealth creation efforts.
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